Marchionne Wins CNH Support for Fiat Industrial’s Offer

Fiat Industrial SpA Chairman Sergio Marchionne won support from CNH Global NV for an improved bid to
combine the tractor and truck makers and shift their focus to
the U.S. from Europe.

CNH “views favorably the latest enhanced offer,” a board
committee evaluating the proposal said in a statement today.
“The special committee has directed its advisers to work with
Fiat Industrial to negotiate definitive documentation.” Fiat
Industrial aims for a final merger deal by Nov. 25.

The new company will have its primary listing in New York
and keep Milan as a secondary listing, said a person familiar
with the deal, who asked not to be identified before an official
announcement.

Fiat Industrial, which already owns 88 percent of CNH,
raised its offer for the rest of the tractor maker by 26 percent
on Nov. 19 after the Amsterdam-based company spurned an earlier
proposal. The maker of Iveco trucks, which was spun off from
Fiat SpA (F) in 2011, boosted its bid with a $10-per-share special
dividend for CNH owners, which will get 3.828 shares in the
merged entity for each share they own. Fiat Industrial investors
will swap their stock one for one.

“It’s been above board, reasonably quick and the extra
paid seems pretty fair,” said Max Warburton, a Bernstein
Research analyst in London with an outperform rating on the
shares. “Both sides get a more liquid, clearer equity story, so
I think everyone wanted to see this get done.”

Shares Gain

Marchionne, who’s targeting more than 25 billion euros ($32
billion) in sales for Fiat Industrial this year, is seeking to
create in the combination the world’s third-largest capital-goods company, which won’t use Fiat in its name. The merged
entity would have a product range spanning Iveco delivery
trucks, New Holland harvesters and FPT ship engines.

Fiat Industrial rose as much as 14 cents, or 1.7 percent,
to 8.54 euros and was up 1.1 percent as of 12:56 p.m. in Milan.
The stock has gained 28 percent this year, valuing the company
at 10.4 billion euros. CNH closed down 4 cents at $47.50 in New
York yesterday, valuing the tractor maker at $11.4 billion.

The remaining 12 percent CNH stake is worth $1.37 billion
at the current market price. The special dividend for the
holding totals $278 million. CNH last month rejected Fiat
Industrial’s proposal to combine the two in a share exchange
with no premium for CNH investors as “inadequate.”

Reorganizing

“It is gratifying for both companies to take this step,
which should enable CNH to put in place plans to pay the
extraordinary dividend to CNH minority shareholders by the end
of this year,” Marchionne said today in a statement.

Fiat Industrial is reorganizing in response to the debt
crisis in Europe. Its Iveco truck unit announced plans in July
to shut five plants in Europe by the end of 2012 because of the
sovereign-debt crisis in the region.

CNH CEO Richard Tobin was appointed chief operating officer
for Fiat Industrial to help with the integration. JPMorgan Chase
& Co. and Lazard Ltd. (LAZ) advised the CNH committee.

“CNH gave its green light and this bring back the focus on
fundamentals,” said Massimo Vecchio, an analyst for Mediobanca
in Milan.